Shake Up In Chinese Search Market As Engines Merge

In a move somewhat reminiscent of the back end merger of Yahoo and Microsoft’s search engines, the number three and four search sites in China are set to combine assets and cross-promote in a nearly $450 million deal writes ZDNet.

The deal involves Chinese online portal Tencent’s Soso search engine and Sohu’s Sogou. The latter is number three and while Soso is number four in the Chinese search market. Google is number five.

Qihoo 360 technology company’s search engine (So.com) has moved into second place after Baidu. Amazingly the Qihoo search engine only launched in Q3 of last year. The relative rankings of China’s search engines are as follows:

Baidu: 69 percentQihoo: 15 percentSogou: 8.9 percentSoso: 3.5 percentGoogle: 2.1 percent

The Wall Street Journal says that Tencent is buying 36.5 percent of Sogou:

Chinese Internet giant Tencent Holdings Ltd. has invested $448 million in Sohu.com Inc. Sogou online search business, taking a 36.5% stake.

Tencent, which is particularly strong in social media and gaming services, already has a search service called Soso, but it�s tiny. Tencent now plans to merge its own search business with Sogou, which will create a stronger search business, though still much smaller than Baidu Inc., China�s largest search provider.

Last August Qihoo was the rumored suitor for the stake in Sogou. The Tencent investment is thus regarded as partly defensive to keep Sogou out of Qihoo’s hands.

It’s not entirely clear from what I’ve seen whether Tencent’s Soso will entirely disappear or remain. Here’s what ZDNet says:

Tencent�and Sogou have agreed to jointly develop, cross-promote and integrate their respective products and services, while collaborating in areas of search technology, user insights and data sharing. Sogou’s leading products, including Sogou Pinyin and Sogou Search, will gain direct access to the massive user base of Tencent’s online and mobile social communities.